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1 Unit Simple Interest and 3 Reading Compound Comprehension Interest Passage 1 [Dec. 2000] Anxiety and conscience are a pair of powerful dynamos. Of course, I can only speak for myself. Between them, they have ensured that one shall work at anything worthwhile. They are blind forces which drive but do not direct. Fortunately, I have also been moved by a third motive the wish to see and understand. Curiosity is another motive for action. It is also one of the distinctive charactersitics of human nature and contrasted with the natures of non-human animals. All human beings have curiosity in some degree and we also have it about things which are of no practical use. Curiosity may be focussed on anything in the universe, but the spiritual reality of the phenomena should be the ultimate objective of all curiosity for it to be fruitful. Thanks to my mother, my approach to this ultimate objective is through the story of human affairs. 1. What is the main objective of this passage? (a) Distinguish between human beings and animals (b) Project curiosity as a potent motivating factor (c) Project anxiety and conscience as inadequate motivators (d) Motivation and spiritual reality 2. A characteristic peculiar to human beings that is referred to is : (a) superior intelligence (b) spirit of enquiry (c) capacity to rationalise and analyse (d) ability to shift the practical from the impractical 3. Which of the following statements is true according to the passage? (a) Animals are as curious as human beings (b) Curiosity is the only motive for action (c) People motivated by curiosity do not need other motives to guide them (d) People motivated by anxiety and conscience alone can be misdirected 4. According to the author : (a) hose who have little curiosity are curious about unimportant things (b) apart from humans no other living beings have the gift of curiosity (c) the highest form of curiosity can be satisfied by study of human affairs alone (d) spiritual reality is the ultimate goal of humans through action 5. The author subscribes to the view : (a) one s curiosity should focus beyond the facade on the latent meaning of things (b) curiosity is an inherited family characteristics (c) a study of human affairs is the most effective method of satisfying one s curiosity (d) in order to motivate, curiosity must be coupled with anxiety and conscience Passage 2 [Dec. 2000] Soft-bodied animals like caterpillars often fall a prey to voracious hunters like birds or reptiles. Despite having no means to actively defend themselves, with weapons like claws or jaws, they have, nevertheless, evolved other equally effective deterrents. A particular species of the caterpillar lives at an altitude of over 2,500 metres in the Himalayas. It uses prominent colours to inform would be predators of its inedibility. In the event that an inexperienced or adventurous bird did eat the caterpillar, it would probably vomit it out soon after, and subsequently desist from attacking similar species in the future. Though this would do the unfortunate victim no good, the species benefits. A rare example of the martyr among animals. 1. Caterpillars cannot defend themselves because they : (a) are passive animals (b) are lazy (c) cannot acquire weapons (d) have no claws or jaws 2. The expression other equally effective deterrents means : (a) preventive weapons which have equal effect on others (b) mechanism which scares everyone equally well (c) preventive equipment which is as effective as something that has been already mentioned (d) deterrents that are as powerful as those the caterpillars have 3. The Himalayan caterpillar uses prominent colours to : (a) warn the predator (b) attack the predator (c) reveal itself (d) defend itself 4. Experienced birds do not attack the Himalayan caterpillar because they are : (a) repulsive (b) inedible (c) aggressive (d) diseased 5. In the context of the passage, a martyr is one who dies : (a) without putting up resistance (b) without any gain to oneself (c) while defending one s homeland (d) to save others Passage 3 [Jan. 2001] Over four hundred years after his death, scholars are still travelling the mysteries of Michelangelo s art. Recently one mystery that was revealed was that his famous drawing of a pensive Cleopatra included a hidden drawing of a different Cleopatra on the reverse side. This hidden Cleopatra shows a tormented woman, whose eyes stare out at the viewer and whose mouth is open, screaming in horror. The two images,

2 100 Reading Comprehension drawn on two sides of the same paper, can be viewed simultaneously. A second mystery concerns Michelagelo s architectural plan for the dome of St. Peter s Basilica in Rome. Did he intend for the dome to look like the model he built between 1558 and 1561? Or did he change his mind after building the model and decide to elevate the dome in the way it is today? Scholars do not agree on the answer. A third mystery about one of the greatest artists who ever lived was why he destroyed hundreds or thousands of his drawings before he died. Did he feel they were unimportant? Did he want posterity to see only his finished products? 1. It can be inferred from the passage that the most unusual aspect of the Cleopatra drawing is that : (a) the figure is tormented (b) the figure is screaming (c) one drawing is hidden (d) one drawing is backward 2. The word pensive (underlined) can best be substituted with the word : (a) angry (b) happy (c) anxious (d) thoughtful 3. The dome of St. Peter s Basilica : (a) bears no relation to the one in the model (b) was destroyed after the model was built (c) is raised more than the one in the model (d) follows the plan of the model 4. According to the passage, Michelangelo is : (a) a private person (b) one of the greatest artists in the world (c) the most famous architect in Rome (d) screaming in horror 5. Why did Michelangelo destroy so many drawings before he died? (a) Nobody knows (b) They were unimportant (c) They were only drafts (d) He had changed the drawings Passage 4 [Jan. 2001] We call a man irrational when he acts in a passion, when he cuts off his nose to spite his face. He is irrational because he forgets that, by indulging the desire which he happens to feel most strongly at the moment, he will thwart other desires which in the long run are more important to him. If men were rational, they would take a more correct view of their own interest than they do at present; and if all men acted from enlightened self-interest, the world would be a paradise in comparison to what it is. I do not maintain that there is nothing better than self-interest as a motive to action, but I do maintain that self-interest, like altruism, is better when it is enlightened than when it is unenlightened. In an ordered community it is very rarely to a man s interest to do anything which is very harmful to others. The less rational a man is, the oftener he will fail to perceive how what injures others also injures him, because hatred or envy will blind him. Therefore, although I do not pretend that enlightened self-interest is the highest morality, I do maintain that, if it became common, it would make the world an immeasurably better place than it is. Rationality in practice may be defined as the habit of remembering all our relevant desires, and not only the one which happens at the moment to be strongest. Like rationality in opinion, it is a matter of degree. Complete rationality is no doubt an unattainable ideal, but so long as we continue to classify some men as lunatics it is clear that we think some men more rational than others. I believe that all solid progress in the world consists of an increase in rationality, both practical and theoretical. To preach an altruistic morality appears to me somewhat useless, because it will appeal only to those who already have altruistic desires. But to preach rationality is somewhat different, since rationality helps us to realise our own desire on the whole, whatever they may be. A man is rational in proportion as his intelligence informs and controls his desires. I believe that the control of our acts by our intelligence is ultimately what is of most importance, and that alone will make social life remain possible as science increases the means at our disposal for injuring each other. Education, the press, politics, religion in a word, all the great forces in the world are at present on the side of irrationality, they are in the hands of men who flatter King Demos in order to lead him astray. The remedy does not lie in anything heroically cataclysmic, but in the efforts of individuals towards a more sane and balanced view of our relations to our neighbours and to the world. It is to intelligence, increasingly side-spread, that we must look for the solution of the ills from which our world is suffering. 1. What is the central idea of the passage? (a) The problems of the world can best be solved by rationality and enlightened self-interest (b) Altruism and rationality are the main indicators of intelligence (c) Altruism can make this world a heaven (d) Man is absolutely irrational 2. What is the author s attitude to modern development in science and communications? (a) Cynical about their use (b) Sceptical about the uses they are put to (c) One of cautious acceptance (d) One of concern about their harmful potential 3. Rationality, according to the passage, means mainly : (a) having regard for others (b) intelligent control of one s desires (c) the ability to cultivate a balanced view of one s surroundings (d) power to resist yielding to strong passions 4. The author feels that it is impractical to appeal to altruism because : (a) not all people are altruistic by nature (b) altruism is weaker than rationality (c) altruism is more refined than rationality (d) none of the above 5. The King Demos refers to : (a) populace (b) politician (c) scientist (d) despot Passage 5 [May 2001] One simple physical concept lies behind the formation of the stars : gravitational instability. The concept is not new. Newton first perceived it late in the 17th Century. Imagine a uniform, static cloud of gas in space. Imagine then that the gas is somehow disturbed so that one small spherical region becomes a little denser than the gas around it so that the small region s gravitational field becomes slightly stronger. It now attracts more matter to it and its gravity

3 increases further, causing it to begin to contract. As it contracts its density increases, which increases its gravity even more, so that it picks up even more matter and contracts even further. The process continues until the small region of gas finally forms a gravitationally bound object. 1. The primary purpose of the passage is to : (a) describe a static condition (b) support a theory considered outmoded (c) depict the successive stages of a phenomenon (d) demonstrate the evolution of the meaning of a term 2. It can be inferred from this passage that the author views the information contained within it as : (a) lacking in elaboration (b) original but obscure (c) speculative and unprofitable (d) uncomplicated and traditional 3. With which of the following words can you replace the word uniform as given in this passage? (a) Uniting (b) Varying (c) Gaseous (d) Unvarying 4. What does the underlined word it stand for in the passage? (a) Gravitational instability (b) Cloud of gas (c) Small spherical denser region (d) Matter 5. The author provides information that answers which of following questions? 1. What causes the disturbances that changes the cloud from its original static condition? 2. How does this small region s increasing density affect its gravitational field? 3. What is the end result of the gradually increasing concentration of the small region of gas? (a) 1 only (b) 2 only (c) 2 and 3 only (d) 1, 2 and 3 Passage 6 [May 2001] A jolly musicologist by the entirely unobjectionable name of Henry Pleasants has written a book called The Agony of Modern Music. That word agony is right. Much of it is just not written down but improvised. Much of what passes for music of these times is raucous noise and the excuse for persisting with it is that every common youngster understands and likes it. The pleasant fellow concedes that serious music is virtually dead. This may be dismissed as yet another pleasantry which the undirected young indulge in. Paul Hindesmith, possibly one of the last of the classical giants, once said that some composers tended to develop an oversublimated technique which produces images of emotions that are far removed from any emotional experience a relatively normal human being ever has. That is just the point. High art can never be totally democratised. There is a barrier between the egghead and the hoipolloi and it would be lazy idealism to ignore this. When Bach played and Beethoven roared, who was then the gentleman? The pity of it is that while talking music to the masses, all known rules are broken and improvisation becomes king. That, roughly speaking, is how jazz was born; by dropping discipline, inspiration, deep personal emotions and every element of creative art, and adopting improvisation as its main rationale. Why, they even tried to smuggle bits of jazz into serious music so that the composers Reading Comprehension 101 could somehow survive. Now they are going one step further : learn it by ear, don t write down the stuff, make it up as you go along and hope, by these shoddy techniques, that everyone present will applaud and, thus, provide the composer and the performers with their daily bread. 1. The author uses the word improvisation to suggest : (a) making the original more sublime (b) tampering with the original (c) rendering the original more popular (d) simplifying the original 2. According to the author high art cannot be democratised because : (a) high art is oversublimated (b) people differ in their emotional experience (c) masses cannot be expected to appreciate what only the few intelligent can (d) democratising necessarily involved improvisation 3. They tried to introduce bits of jazz in serious music so that : (a) music might survive (b) the masses could take to serious music (c) the new composers might survive (d) music is democratised 4. Which of the following words can best replace the word raucous in the paragraph? (a) Shrill (b) Soothing (c) Pleasant (d) Popular 5. Speaking of the techniques of some composers Paul Hindesmith said that they evoked image of emotions : (a) not experienced by normal people (b) felt only by subnormal people (c) never felt by masses (d) not experienced by eggheads Passage 7 [Sept. 2001, Dec. 1999] If life exists on Mars, it is most likely to be in the form of bacteria buried deep in the planet s permafrost or lichens growing within rocks, say scientists from NASA. There might even be fossilized Martian algae locked up in ancient lake beds, waiting to be found. Christopher McKay of NASA s Ames Research Centre in California told the AAAS that exobiologists, who look for life on other planets, should look for clues among the life forms of the Earth s ultra-cold regions, where conditions are similar to those on Mars. Lichens, for example, are found within some Antarctic rocks, just beneath the surface where sunlight can still reach them. The rock protects the lichen from cold and absorbs water, providing enough for the lichen s needs, said McKay. Bacteria have also been found in 3-million-year-old permafrost dug up from Siberia. If there are any bacteria alive on Mars today, they would have to have survived from the time before the planet cooled more than 3 billion years ago. Nevertheless, McKay is optimistic : It may be possible that bacteria frozen into the permafrost at the Martian South Pole may be viable. McKay said algae are found in Antarctic lakes with permanently frozen surfaces. Although no lakes are thought to exist on Mars today, they might have existed long ago. If so, the dried-out Martian lake beds may contain the fossilized remains of algae. On Earth, masses of microscopic algae form large, layered structures known as stromatolites, which survive as fossils on lake beds, and the putative Martian algae might have

4 102 Reading Comprehension done the same thing, said Jack Farmer, one of McKay s colleagues. The researchers are compiling a list of promising Martian lake beds to be photographed from spacecraft, said Farmer. Those photographs could help to select sites for landers that would search for signs of life, past or present. If we find algae on Mars, I would say the Universe is lousy with algae, McKay said. Intelligence would be another question. 1. The passage is primarily concerned with : (a) the possibility of life on Mars (b) selecting sites for landers on Mars (c) research on Mars (d) findings of Christopher McKay on Mars 2. Lichens survive in the extreme cold conditions of Antarctica on earth for all the following reasons, except : (a) some Antarctic rocks protect lichens beneath their surface (b) bacteria in the Antarctic frost protect lichen from the residual cold after the rock absorbs water (c) sunlight penetrates the surface of the Antarctic rock where lichen grows (d) the Antarctic rocks protect the lichen from cold by absorbing water and leaving enough for the lichen s needs 3. Which of the following statements is not true? (a) If any bacteria are alive today on Mars, they must have survived from the time before the planet cooled (b) Space photographs of Martian craters should reveal to the explorers signs of life there (c) Bacteria frozen into permafrost at the Martian South Pole may be viable (d) On digging up, more than 3 million years old Siberian permafrost has revealed bacteria 4. The most primitive forms of life likely to exist on Mars are all the following, except : (a) villus and spare (b) bacteria (c) algae (d) lichen 5. Exobiologists might find on Mars algae similar to stromatolites on earth because : (a) on our planet stromatolites are formed by microscopic algae (b) martian lake beds may contain fossilized remains of algae similar to stromatolites on earth (c) there is evidence that photosynthesis which takes place in earth s algae can be found in Martian algae too (d) all of the above Passage 8 [Sept. 2001] Are the 1980s and 1990s the era of colour? According to some people, they are. Now you can buy radios and electric fans in lavender and pink. Restaurants have an emphasis on flowers and colourful plates. Cars are coming out in pink and aqua. Even bathroom fixtures are being made in honeydew and blond. Part of the importance of the colour of an object is that the colour affects the way one feels about it. You want a vacuum cleaner to look light and easy, which is why it may be coloured in pastels and light colours. But gardening equipment you want to look powerful. You would never find a lawn mower in pink, but red would be fine. Not very long ago, sheets were always white and refrigerators commonly came in colours like old gold avocado green and coppertone. Now those are thought of as old-fashioned. Popular colours change because fashion influences everything. In fact, new colours often spring from the fashion industry. It s a lot cheaper to make a blouse or skirt than a sofa. After people get used to seeing new colours on clothing or towels, they are ready to accept those colours in carpeting, refrigerators, or cars. Colour-analysis consultants have been very successful in recent years. People want to choose the most flattering colours for make up and clothing. Some car designers are even saying that people may begin buying cars of the colour that goes with their skin colouring. This sounds too extreme. It s hard to believe that people are that impressionable! 1. The main subject of the passage is : (a) popular colours today (b) colour consultants (c) the influence of colour (d) colours that flatter people 2. The word era in line 1 could best be replaced by which of the following words? (a) Season (b) Age (c) Epic (d) Generation 3. According to the author which of the following is not popular now? (a) Coppertone (b) Colourful cars (c) Pastels (d) Colourful bathroom fixtures 4. According to the author, why would red be a good colour for a lawn mower? (a) Because it is strong (b) Because it is cheap (c) Because it is light (d) Because it is pastel 5. In this passage which of the following are not used as names for colours? (a) Fruit (b) Hair colour (c) Minerals (d) Drinks Passage 9 [Dec., 2001] Management is a set of processes that can keep a complicated system of people and technology running smoothly. The most important aspects of management include planning, budgeting, organizing, staffing, controlling and problem solving. Leadership is a set of processes that creates organizations in the first place or adapts them to significantly changing circumstances. Leadership defines what the future should look like, aligns people with that vision, and inspires them to make it happen despite the obstacles. This distinction is absolutely crucial for our purposes here. Successful transformation is 70 to 90 percent leadership and only 10 to 30 percent management. Yet for historical reasons, many organisations today don t have much leadership. And almost everyone thinks about the problem here as one of managing change. For most of this century, as we created thousands and thousands of large organisations for the first time in human history, we didn t have enough good managers to keep all those bureaucracies functioning. So many companies and universities developed management programmes and hundreds and thousands of people were encouraged to learn management on the job. And they did. But, people were taught little about leadership. To some degree, management was the main item on the twentieth-century agenda because that s what was needed. For every entrepreneur or business builder who was a leader, we needed hundreds of managers to run their evergrowing enterprises.

5 Unfortunately for us today, this emphasis on management has often been institutionalized in corporate cultures that discourage employees from learning how to lead. Ironically, past success is usually the key ingredient in producing this outcome. The syndrome, as I have observed it on many occasions, goes like this : success creates some degree of marked dominance, which in turn produces much growth. After a while keeping the ever larger organisation under control becomes the primary challenge. So attention turns inward, and managerial competencies are nurtured. With a strong emphasis on management but not leadership, bureaucracy and an inward focus take over. But with continued success, the result mostly of market dominance, the problem often goes unaddressed and an unhealthy arrogance begins to evolve. All of these characteristics then make any transformation effort much more difficult. Arrogant managers can over evaluate their current performance and competitive position, listen poorly, and learn slowly. Inwardly focussed employees can smother those who want to respond to shifting conditions. And the lack of leadership leaves no force inside these organisations to break out of the morass. 1. What is the main topic of the passage? (a) Importance of management schools in the present context (b) Good managers (c) Importance of leadership in an organisation (d) Management and success of an organisation 2. Why did companies and universities develop programmes to prepare managers in large numbers? (a) Companies and universities wanted to generate funds through these programmes (b) Organisations wanted to create communication network through trained managers (c) Large number of organisations were created and they needed managers in good numbers (d) Only trained managers could lead an organisation to success 3. Which of the following statements is not true according to the passage? (a) Bureaucratic culture smothers those who want to change conditions (b) Leadership involves carrying out important functions such as budgeting and planning (c) Pressure on managers comes mostly from within (d) Leadership has the potential to establish direction 4. Management education was emphasized in the management programmes because : (a) motivating employees was thought to be done by managers (b) organisations wanted to create a powerful guiding coalition (c) establishing direction was the main force of organisations (d) management was the main item of agenda in organisations 5. What is the historical reason for many organisations not having leadership? (a) Leaders allow too much complacency in organisations (b) Leaders are not adept in carrying out managerial functions and organisations need good managers only (c) The view that leaders are born and not made (d) Socio-political pressure Reading Comprehension Which of the following is similar in meaning to the underlined word nurtured as used in the passage? (a) Created (b) Developed (c) Surfaced (d) Thwarted 7. What according to the author is leadership? (a) Inspiring people to realise the vision (b) Planning and budgeting resources (c) Carrying out the crucial function of manager (d) Keep the technology running smoothly 8. Which of the following characteristics help organisations in their transformations efforts? (a) Bureaucratic and inward looking approach (b) A strong and dogmatic culture (c) Emphasis on leadership rather than management (d) Emphasis on customer satisfaction 9. Why were people taught little about leadership in management programmes? (a) Enough study material was not available (b) Leadership was considered a political phenomenon (c) Focus of these programmes was on developing managers (d) None of the above 10. Which of the following statements is false according to the passage? (a) Bureaucracy fosters arrogant culture (b) Leadership competencies are nurtured only in very large size organisations (c) Successful transformation in organisation is largely possible because of leadership (d) Managers tend to stifle innovation Passage 10 [May 2002] Know Your Product. Believe in Your Product and Sell with Enthusiasm These are the fundamental selling truths. If you don t know your product, people will resent your efforts to sell it; if you don t believe in it, no amount of personality and technique will cover that fact; if you can t sell with enthusiasm the lack of it will be infectious. Nothing turns off a potential customer quicker than a salesman s lack of familiarity with his products. Have you ever walked into a a department store, asked a clerk how a particular gadget or appliance worked, then stood by while he fiddled with the knobs and wondered out loud why they didn t make things simple anymore? Even if he finally gets it to work, by that time your interest has diminished and you are not likely to make the purchase. Knowing your product also means understanding the idea behind its projecting, how it is perceived the relationship between it and what someone wants to buy. How will it help the customer? What problem is it solving? What is its promise? An understanding of these intangible features is at least as imporant as knowing a product s mechanical features. Yet precisely because they are intangible, and may even vary from customer to customer, they are more prone to being misinterpreted and misunderstood. Knowing your product also means understanding the image it is projecting. I believe all products project an image of some sort. It may be a positive one, which you want to promote, or a negative one, which you need to overcome.

6 104 Reading Comprehension The home computer industry, for instance, really didn t take off until it solved its image problem. Here was this device that saved time and simplified all sorts of tasks, yet it looked complicated and difficult to use. Until it was made to seem friendlier, less forbidding, sales lagged. Two reasons I wouldn t Buy from Me. Part of knowing your product is knowing all the reasons someone might not want to buy it. Anticipate the reasons. State them clearly in your mind, spell them out on paper if necessary and have an answer ready for each of them. A good portion of almost any sales effort is spent overcoming objections. Don t try to convince a buyer that these objections aren t valid. Concentrate instead on altering his frame of reference. In anticipating and overcoming objections a salesman has to practice a kind of theory of relativity. He has to ask himself, compared to what? Think about a major purchase you have made buying a house, for instance and the mental gyrations you went through to get there. At some point you were making comparisons. Compared to another house that interested you, but in a slightly less desirable neighbourhood, it seemed expensive. Compared to what you could have bought it for ten years ago, it seemed outrageous. But compared to its resale value, compared to what you deserve you were able to justify the price. In licensing the name of an athlete, I know the two objections we are most likely to encounter are the price, the size of the guarantees- and the athlete s lack of availability to the licensers. The president of a major apparel firm once told me that he wasn t going to pay an athlete more money than he was making himself. By this criterion, the seven-figure guarantee that we were asking probably did seem outrageous. But I was quick to point out that what he was buying was instant brand name identification, and compared to the tens of millions of dollars it would cost to develop a comparable degree of brand recognition, the guarantees were indeed reasonable. He also questioned why, if he agreed to pay that kind of money, he was only entitled to five days of the athlete s time. Again, it was a matter of altering his frame of reference. From which would his company benefit more, I asked. Additional department store promotions or this particular athlete winning more major tennis competitions, and didn t he agree that the best use of athlete s time, as far as his company was concerned, would be hitting millions of tennis balls of his way to Centre Court at Wimbledon? By helping the buyer see different frame of reference, by altering his perceptions, we were able to finalise a licence deal that has resulted in the company s most successful line of apparel and in several million dollars of income to our client. 1. What, according to the author, would selling without enthusiasm result in? (a) No sale at all (b) Absence of enthusiasm in the buyers as well (c) Lack of confidence of the salesman in the product (d) Lack of knowledge on the part of the salesman 2. What does the author say about the image your product should project? (a) It is always in harmony with customers needs (b) Its knowledge is necessary to make your product sell (c) The better is the image the higher would your product sell (d) It serves to lift up the sagging sales 3. How does the author relate the intangible features of a product to its mechanical ones? (a) The intangible features are more powerful than the mechanical (b) The mechanical features cause the sales of the product (c) Not understanding the mechanical features can sag the sales (d) The product can be throughly known only by the knowledge of both 4. What, according to the author, caused the initial de-back in the computer industry? (a) The misplacement of brand in the market (b) The lack of faith in the product capacity (c) The computers were highly complicated (d) The range of costs being very high 5. In reference to the athlete, what does the author mean by additional departmental store promotions? (a) The author means the additional expenses on advertisements (b) He means chasing between overspending and thriftness (c) He means concentrating on the athlete s tennis instead (d) He means advertising in the athlete s leisure time Passage 11 [May 2002] The most important requirement for the data used in the strategic review process is that they should be objective. In addition, the criteria should be familiar, well-understood, and accepted measures of financial performance. There are two reasons. First, the ultimate responsibility of the board is to understand the impact of a given strategy on the value of the owners investment. This obligation implies evaluating performance in financial terms. Second, although it is inevitable that much of the evidence on the success of an evolving strategy is subjective, managers familiarity with the details of product market and company-specific issues, and their access to an incredible amount and variety of data give them an advantage over outside board members. Objective data consistently presented and reinforced by the cumulative evidence of past performance can strengthen the power and credibility of the board s opinion. Standard financial indicators facilitate discussion in terms all parties can understand. Some will argue that using such indicators is just one more example of a myopic preoccupation with the corporate bottom line, leading to short term decisions that erode long-term competitive strength and profitability in domestic and international product markets. I must disagree. Although I think that financial criteria should be the central focus of board oversight, I do not think such a focus prevents the board from considering other kinds of progress. It should certainly weigh all objective-or even subjective-evidence of strategic progress demonstrating long-term competitive superiority. But it is equally important for the board to intervene when it sees persistent, long-term erosion of the investment base, on which all corporate activity depends. The criteria best suited to the strategic oversight process share two important characteristics. They focus on the sustainable rate of return on shareholder investment produced by the corporate income stream. They also permit objective comparisons among the company s separable income streams and with alternative investments in other companies inside or outside the industry. These data should help the board

7 determine whether the company s chosen strategy, or a particular decision, will contribute to a long-term return of shareholder investment equal or superior to other investment alternatives of comparable risk. They should also allow a comparison of the promise of future returns with the reality of past performance. In the final analysis, these criteria should reflect a fundamental economic reality : The long-term loyalty of equity holders depends solely on sustaining a competitive return investment. Without that, no product market strategy is safe. Although professional managers might find this dictum hard to accept, it is never the less the reality of the public capital markets in which they operate. Just doing better than all major competitors in the same industry may not, in the end, be good enough to justify continued investor support. With this in mind, boards will find that several criteria satisfy the basic criteria of a strategic review process. One is the reported return on book investment (ROI), particularly when it is disaggregated into its prime components. It has the advantage of being based on data familiar to shareholders and management. It shows profit per unit of sales (profit margin), sales per unit of capita employed (asset turnover), and capital employed per unit of invested (leverage). When multiplied together, these ratios transform profit margin into return on equity. This particular set of measurements has two weaknesses, however. First it may be subject to random changes in accounting practice, so that users may have to make appropriate retroactive adjustments to the raw data. In addition, it does not provide an external standard of comparison. The underlying components of the corporate income stream need to be broken out, and comparable data on companies inside and outside the industry, gathered. The data of review should also encompass information on investor response including price-to-earnings and market-to-book-value ratios. These data reveal evidence of investors reaction to published information on company performance and are a measure of confidence. They are an essential supplement to any measurement based primarily on company-specific data. 1. Which of the following would negate the author s assumption of the manager s advantage over outside board members in the strategic review process? (a) Familiarity with the multiplicity of details relating to the various product-market combination in which the company is involved (b) In complete understanding of the various issues specific to the company which would need to be factored into the decision making process (c) The existence of a well-developed management information system providing reliable information on the state of the company competition, and the industry (d) The presence of internal mechanisms to identify the relative strengths and weaknesses prevailing in the company, with corresponding studies done across competitors and the industry 2. Which of the following would the author not consider a satisfactory criterion to be used in a strategic review? (a) Analysing the various components of the reported return on book investments (b) The pay scales within the company as compared to those prevailing in the industry Reading Comprehension 105 (c) Analysis of the various components of the company s separable income streams and their comparison with alternative investment opportunities (d) Information on the response of investors to the company s performance as seen in ratios such as the market-to-book-value ratio 3. This passage could be a part of : (a) a book by a social scientist on the impact of industry on society (b) a newspaper article by a practising manager on the role of marketing in an organisation s strategic planning process (c) a study on the role of financial ratios in the corporate planning process (d) a theoretical article on the need for, and the tools to be used in a company s strategic review mechanism 4. Which of the following statements cannot be inferred from the passage? (a) The strategic review process would be unsuccessful if any non-objective criteria are applied in the process (b) It is necessary that the criteria used for the strategic audit should be focused on monitoring that the company is achieving and sustaining a competitive return on investments at all times (c) The analysis of financial ratios based on the information published by the company is not a sufficiently foolproof evaluation criterion in itself (d) All of these 5. According to the author : (a) evaluating business strategies from the point of view of their impact on the company s bottom line is myopic and leads to short-term decision making (b) there is no significant correlation between the company s performance and the public perception of it as manifested in various ratios such as the price-to-earnings ratio (c) although a particular strategy may provide significant competitive gains, it should not be allowed to cause long-term erosion of the company s investment base (d) the promise of future returns should always be given greater weightage in the strategic review process than analysis of past performance Passage 12 [Feb. 2002] Deciding whether a given population constitutes a species can be difficult in part because there is no single accepted definition of the term. Years ago, evolutionary biologist Ernst W. Mayr while propounding what is called the biological species concept, proposed that the definition be based on reproductive compatibility. Specifically, he considered a species to be a group of animals that can mate with one another to produce fertile offspring but cannot mate successfully with members of a different group. Yet this idea can be too restrictive. First, mating between species (hybridisation), as often occurs in the canine family, is quite common in nature. Second, in some instances, the differences between two populations might not prevent them from interbreeding, even though they are rather dissimilar in traits unrelated to reproduction; one might question whether such disparate group should be considered single species. A third problem with the biological species concept is that investigators can not always determine whether two groups that live in different places are capable of interbreeding.

8 106 Reading Comprehension When the biological species concept is difficult to apply, some investigators use phenotype, an organism s observable characteristics, as a surrogate. Two groups that have evolved separately are likely to display measurable differences in many of their traits, such as the size of the skull or the width of the teeth. If the distribution of measurements from one group does not overlap those of the other group, the two groups might be considered distinct species. Another widely discussed idea designates a species based on the presence of some unique characteristic not found in another closely related organism - for example the upright posture of humans - or a distinguishing sequence of nucleotides (DNA building blocks), in a gene. Proving that the red wolf fits any of these descriptions has been extremely challenging. For instance, the red wolf is not a species by Mayr s definition, because it can breed extensively with the coyote and the gray wolf (C. lupus). And efforts to classify the red wolf based on its phenotypic traits have yielded ambiguous results. John James Audubon and John Bachman, who described the red wolf in their classic 1851 book, Viviparous Quadrupeds of North America, had difficulty in distinguishing the red wolf from the physically similar coyote and gray wolf. Modern researchers looking at phenotypic traits have variously concluded that the red wolf is a subspecies of the gray wolf, a hybrid of the coyote and the gray wolf, a full-fledged species. 1. What does the passage mainly discuss? (a) The need to provide a strict definition for the term species (b) The weakness in Ernst W. Mayr s definition of the term species (c) The difficulty of defining the term species (d) Whether the red wolf meets the definition of the term species 2. It can be inferred from the passage that two different species living in different locations : (a) have different skull sizes (b) might be able to breed with one another (c) possess unique characteristics not found in other organisms (d) cannot be compatible in terms of reproduction 3. The underlined word distinct in the passage is closest in meaning to : (a) common (b) unusual (c) familiar (d) different 4. The author does everything except : (a) refer to as book (b) make a criticism (c) make a comparison (d) provide a definition 5. With which of the following statements would the author be least likely to agree? (a) The red wolf has been proven to be hybrid of the coyote and the gray wolf (b) Biologists have posed at least three different definitions for the term species (c) Animals from different species are capable of mating and producing fertile offspring (d) Mayr s definition of the term species has been shown to be lacking Passage 13 [Feb. 2003] Of the many aspects of public administration, the ethical aspect is perhaps the most important but the least codified. While administrative rules and procedures have been codified in various public documents and manuals, there is no manual for the ethics of public servants. While organisational behaviour analyses the factors which influence the behaviour of individuals in an organisation, ethics refers to those norms and standards which behaviour of the people in an organisation must conform to. While behaviour analysis deals with factual aspects, ethics relates to the normative aspects of administration. The normative aspects are of the greatest significance. Just as for an individual if character is lost, everything is lost, so also for an administration if the ethics is lost, everything is lost. Neither efficiency nor loyalty could be substitute for high ethical standards. In India, though there is no ethical code for public administrators, there are what are called, the Government Servants Conduct Rules. These rules lay down what constitutes misconduct for the public servants. It is apparently implied that such misconduct, which is not permitted, is also unethical conduct. 1. As per the passage, organisational behaviour is : (a) same as ethics in organisations (b) different from ethics in organisations (c) human behaviour in organisations including ethics (d) none of these 2. Ethics is to an administration, what character is for : (a) an administrator (b) an official (c) an individual (d) none of these 3. Government Servants Conduct Rules are meant for : (a) guiding the ethical conduct of government servants (b) guiding what constitutes misconduct for public (c) guiding what constitutes misconduct for government servants (d) none of these 4. The underlined word manual in the context of the given passage means : (a) hand operated (b) physical (c) guide book (d) none of these Passage 14 [Feb. 2003] The public sector is at the cross roads ever since the launch of economic reforms programme in India. The pendulum has been swinging between survival and surrender. It is the result of a confluence of several factors : a shift in global economic environment, the emergence of the market economy and myths surrounding the performance of the public sector. So virulent has been the onslaught that it is becoming axiomatic that by the very concept, the public sector is inefficient and resource waster whereas private enterprise is resource efficient. The reform programme in India commenced with the policy of restricting the public sector supported by greater public participation. With the passage of time, the process of liberalization has shifted to privatization in a disguised form couched as strategic role. In the wake of the recent hot pursuit of the wholesale privatisation programme a lively and poignant debate has emerged. It provides a golden opportunity to introspect and revisit the issue. At the very outset, it must be made clear that in the worldwide liberalized economic environment and very high stake of the state in most public sector undertakings disinvestment policy seeks to differentiate closed or bankrupt enterprises from the private sector, a fact deliberately overlooked by the champions of privatisation. These undertakings need immediate attention. They are an

9 unnecessary drain on the public exchequer. A high priority area for the disinvestment programme ought to be these enterprises but under one or the other argument these remain unattended, may be it involves a tough task. If these cannot be sold lock, stock and barrel asset stripping is the only option. Obviously the government cannot realise good price from these assets but their disposal will help to stop the drain. If the assets are depreciated or become obsolete, then there is no point in holding on to them indefinitely and take to softer option of selling the vibrant and highly profit-making organisations to reduce the budgetary deficit. Non performers exist both in public and private sectors. Why condemn the public sector as a whole? Better option will be closure or privatisation of loss-making and nonviable units, supporting PSU s which could be turned around and made to become healthy and viable and providing autonomy to the boards of PSU s which are performing well and have potential to be globally competitive be welcomed. With public participation in the PSU s there will be a good dose of accountability in the system. What needs to be reviewed are some basic issues : the priorities allocated to the enterprises selected for disinvestment, a comprehensive road map delineating the route, the modes and modalities, timing and its consequences. These basic issues require greater discussion and participative decision-making. In any event, the disinvestment programme in respect of the closed and non-revivable units is a must if the drain of further resources is to be prevented. Let it be understood that PSU s are a big repository of value and it will take quite some time for privatisation programme to materialise despite the desire to expedite the process. Until then if a vacuum emerges attended by uncertainty, it will do a great harm to the investments which were made with such great dedication although desired now. The government has withdrawn a budgetary support over the last decade. If some support is extended, it is largely directed to closed or losing enterprise which have no fortune. 1. The basic issue(s) requiring greater discussion and participative decision making regarding the dis-investment programme is/are : (a) the priorities allocated to the enterprises selected for disinvestment (b) a comprehensive road-map delineating the route (c) the modes and modalities, timings and its consequence (d) all of these 2. The public sector is inefficient and resources waster whereas private enterprise is resource-efficient. This opinion is due to : (a) a shift in global economic environment (b) the emergence of market economy (c) the myths surrounding the performance of the public sector (d) all of these 3. The reform programme in India, started with the policy of restructuring of PSUs, has got shifted to : (a) liberalisation (b) privatisation (c) globalisation (d) none of these 4. What were made with great dedication earlier, but now derided? (a) Disinvestment (b) Investments in PSUs (c) Wholesale privatisation programme (d) Strategic plans Reading Comprehension According to the author, non-performers exist in : (a) government (b) public sector (c) private sector (d) public and private sectors 6. An appropriate title to the passage will be : (a) Disinvestment of PSUs (b) Economic Reforms Programmes in India (c) Liberalised Economic Environment (d) Non-performing Assets Passage 15 [Feb. 2003] Famous painter James Whistler said, Industry in art is a necessity - not a virtue and any evidence of the same in the production, is a blemish, not a quality. 1. Whistler is arguing that : (a) the qualities of art are its virtues (b) the product reflects the means of production (c) blemished paintings are the work of over industrious artists (d) the artist must work hard, but the art should look easy Passage 16 [Feb. 2003] Man : How s your new job going? Woman : Not so well. I feel like fish out of water in that job. 1. What does the woman mean? (a) She does not like the fishing industry (b) She feels uncomfortable at work (c) She is very tired (d) She is taking time to get used to the new job Passage 17 [Feb. 2003] Socrates believed that virtue is the outcome of knowledge and that evil is fundamentally ignorance. This is an early instance of the belief that the intellectual or rational is dominant in man and morally superior. 1. Socrates point of view as described in the passage implies which of the following conclusions about evil people? (a) They often dominate those who are morally superior (b) They are unable to achieve complete self knowledge (c) They are ignorant (d) They are inherently virtuous but incapable of showing it Passage 18 [Feb. 2003] The iridescent nature of opals is a result of water trapped inside silica material. With time, this water will escape. Unlike advice given for most precious stones, experts advocate frequent handling of opals, which transmit body oils to the stones and helps them maintain their water content. 1. Which of the following can be inferred from the passage? (a) Opals will eventually lose their colour if left alone (b) Body oils give opals their iridescent colours (c) Opals require the same care as most precious stones (d) An opal stone rarely maintains its value for longer than a century Passage 19 [Feb. 2003] Don t spend the night tossing and turning! Take Eezy - for a sound sleep... you ll wake up re-freshed; energized, with no drugged-up hang over. Remember Eezy when you need that sleep.